Letter from Austin Mitchell MP

To: Members of the Treasury Select Committee

Dear Colleague

Please find enclosed our submission to your inquiry relating to climate change and the Stern review so that you can see its graphs in colour. Its findings may come to you as much as a surprise as to us. They are based on unexpected parallels between the exponential growth of

1. GHG and CO2 emissions

2. the national debt which was in established in 1694

3. the money supply as a whole

4. the credit supply as part of the money supply – especially since 1996.

The basis of our argument is straight forward. Exponential growth is the basic reason for the growing threat to the environment caused, amongst other things, by resource exhaustion, carbon emissions, and global warming. If growth is financed, as ours is, by excessive and largely uncontrolled credit expansion two consequences follow.

First: Growth is concentrated on consumption, immediate satisfaction, and asset appreciation. The emphasis is on the short not the long term. It isn’t channelled into environmental protection, renewable energy, energy self sufficient offices and houses, better public transportation, research into more efficient energy use and production and all the other common purposes which require long term investment and higher public spending.

Secondly: Governments’ ability to sustain public spending and to finance investment and research is reduced because the economy is run for the purposes of finance and banking. Government has not only lost control of the money supply and abdicated its ability to channel it, but it has also lost the seignorage revenues available when it issues credit. All that now goes to the banks to use it for their purposes not the public’s. Financial institutions supply excessive credit and charge high interest. This in turn makes more credit necessary to pay the accumulating interest demands. So the burden of interest on the economy increases and its ability to bear taxes to finance public purposes is reduced.

Financial interests grow fat, companies shed obligations to the environment, to the workers, to their pensions, to the community and to employment, while the public sector grows weaker and less adequate.

Public opinion shows that effective action is expected from Government. Such action implies public funding. We recommend ‘green credit for green purposes’ as the most effective funding mechanism. This can be used not only be nationally, but also proposed internationally

The complete submission covers more than 3000 words due to its extensive references, while the body of our analysis is only 2454 words long. We trust that you will find this acceptable.

Given the political, economic and financial significance of our findings, an invitation to give oral evidence would be most welcome.